Keywords: Control Valves, Electric Power Generation, Chemicals, Process Industries, Market Research Study, Market Forecast, Market Growth
ARC Advisory Group’s latest study titled “Control Valves for India Market Research Study” reveals that despite a moderate dip in the overall control valves revenue in 2014, the shipments are expected to grow at a healthy CAGR during the forecast period. There were several factors contributing to reduced revenue, such as the declining performance of the power sector, fewer projects in the oil and gas sector, and the steep drop in oil prices seen during the second half of the year. Nevertheless, developments mainly in the chemical, petrochemical, and refining industries prevented drastic reduction in 2014 shipments.
As per the forecast, ongoing fears that a global recession may return has companies proceeding with caution for many capital investment plans. Moreover, delay in conversion of policies to concrete business plans/outcomes is causing lower than expected investment and industrial output in India. “From an industry perspective, suppliers with a strong share in the chemical and petrochemical industry were more likely to experience above average growth during 2014 as this industry led the way for control valve investments during 2014,” according to Country Manager G. Ganapathiraman, the co-author of ARC’s “Control Valves for India Market Research Study”.
Shift in Focus to Quick ROI Projects
As the scrutiny on capital expenditure increases, ARC sees a shift in focus from lower initial cost and/or lower total cost of ownership (TCO) for automation investments to a shift in the ability of the automation equipment to provide a quick payback. More than one-half of CEO respondents to a recent ARC survey indicated that they expect a payback period of three years or less from their automation investments. In today’s uncertain economic environment, rapid payback and quantifiable return on investment (ROI) are more important than ever to cost-justify capital investments.
Vertical Industry Trends
Crude oil and natural gas production improved marginally in 2014 as compared to the previous year. Continuing low cost of oil forced oil companies to slash capital expenditures, resulting in delayed oil and gas projects. The chemical and refining industries, however, benefited somewhat from the low oil prices during 2014. With the low feedstock prices, many chemical companies have made the decision to build new facilities now while they have the margins. Investments in refining assets, however, are largely focused on efficiency improvements, safety and environmental regulation compliance, and migrating obsolete equipment.
Suppliers feel that the electric power industry shows immense potential for driving the control valve market. Various energy projects planned and under execution, especially supercritical power plants for 660 MW or more, are also expected to contribute towards higher revenues for control valves. Even though the power sector is experiencing turbulence in terms of lower demand and tariff issues; in the absence of comprehensive grid connectivity, the capacity addition and construction of power plants to feed regional demand continues.
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